U.S. tech companies have been warned that they are at risk of losing a “brains race” with China in the development of AI and other future innovations.
China is Self-Sufficient
A new report from the Hoover Institution into the rapid ascent of Chinese AI startup DeepSeek AI, which rattled stocks such as semiconductor giant Nvidia (NVDA) and Microsoft (MSFT) earlier this year, said it was a “wake-up” call for U.S. innovation strategy.
Hoover researchers discovered that DeepSeek was propelled by a “deeply rooted and increasingly self-sufficient domestic talent pipeline.”
Over half of DeepSeek AI’s researchers were trained entirely in China, and those who passed through elite U.S. institutions largely returned home, “accelerating a reverse flow of innovation capacity that undermines long-standing American advantages.”
Indeed, it found that the U.S. served as a launchpad, not a destination for DeepSeek’s U.S.-affiliated researchers with nearly three-quarters now working back in China.
Blind Spot for U.S. Tech
In short, Hoover said America’s human-capital edge – the idea that people trained in the U.S. would stay and build a life and career in the land of the free – was now no longer certain.
“It is a critical blind spot in U.S. technology policy,” the report said. “Export controls and computational investments are necessary but insufficient. The United States cannot outregulate its way to technological dominance. Competing in this new era requires a renewed focus on developing, attracting, and retaining top talent, both from within the United States and abroad.”
The report is particularly timely given the recent rise in trade and economic tensions between the U.S. and China. That includes the imposition of tit-for-tat tariffs but also the AI race between the two countries.
China has reacted, partly, by re-booting support for the private sector including its technology giants like Alibaba (BABA) and Tencent (TCEHY). That includes investment in both systems and people. U.S. tech firms need to find a way to respond.
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